Hello everyone, 😊
Today I want to talk about another topic in which I am very deeply involved professionally.
Yes you heard right no technical analysis.
The monument real estate and the possible tax optimization.
Why it pays off so well and why I think everyone should own at least one.
I currently work for a "relatively" large real estate sales/project developer.
We specialize in capital investments in the area of new construction and listed properties.
I recently had an interesting conversation with @Hannes_SK in which it became clear that this could be interesting for several people.
I will now roughly explain the concept and in the end show a realistic (current data) calculation, how this could look at a tax rate of 30%.
What makes the listed property so special?
The core idea behind an investment in a listed property is tax optimization, as the state has come up with a special depreciation allowance here. §7i EstG.
The interesting thing here is, since the whole thing is anchored in the legal code, it is not speculation, but provable facts. Since I am basically (see my technical analyses) a fan of clear and calculable data I find the whole super.
The depreciation of a listed property is on average 8.3% over 12 years. This means that you can depreciate the entire renovation portion of a listed property in 12 years.
This is about 70% +-5% of the purchase price, which varies mainly with the previous use of the object (I will always use our data because I can safely prove it).
This may sound very complicated for some - but it is actually not.
For example, if I buy a property worth 500,000 € with a renovation rate of 70%, I can write off 350,000 € of the purchase price over 12 years.
This means that I have an annual depreciation amount of 29,000€. This is then offset against your current tax rate. Means with a tax rate of 30% I get annually approx. 8.750€ from the tax again.
That's 730€ per month that Papa State reimburses me for my real estate investment, which of course varies depending on the tax rate.
Is this all understandable so far? If not feel free to ask questions in the comments.
So to the monument depreciation come then however also the points: Rental income, depreciation of interest, depreciation of the old building portion, depreciation underground parking, kitchen, etc..
In addition, listed properties are usually also qualified for low-interest KFW loans.
Of course, they do not reach the energy standard of a very energy-efficient new building (KFW 55 / KFW40).
However, our listed buildings and also most of the ones I know so far are at the regular new building standard KFW100.
I will now give you an example calculation that should make it clear why even very well selected existing properties will have a hard time generating a similarly high and, above all, similarly calculable return.
Calculation example on the basis of current figures:
Monument & old building - AfA
investment volume 500.000,00€
Renovation share 370.000,00€ (approx. 74%)
Old building share 100.000,00€ (approx. 20%)
--
Monument-AfA 30.500,00€ p.a. / average 8,3%
old building-AfA 2.500,00€ p.a. / average 2,5%
Advertising costs
Interest expenses 20.000,00€ p.a. (500.000,00€ x 4,0%)
(No KFW loan taken into account)
Income from V&V
Rental income 10.500,00€ p.a. (75m² x 12€ cold rent)
Total:
Monument & old building AfA 33.000,00€ p.a.
+ interest expenses 20.000,00€ p.a.
./. Rental income 10.500,00€ p.a.
Balanced
42.500,00€ p.a.
Tax rate 30%:
12.750,00€ p.a. / 1060€ mtl. / 153.000,00€ tax refund in 12y.
Tax rate 40%:
17.000,00€ p.a. / 1415€ mthly / 204.000,00€ tax refund in 12Y.
Debt service:
Interest and repayment 2.300,00€ mtl. (500.000,00€ x 5.5% interest and.
Repayment)
NK not apportionable 100,00€ mtl.
Rental income 900,00€ mtl.
Expenditure before tax 1.500,00€ mtl.
Tax refund (30%) 1.060,00€ mtl.
Expense after tax
450,00€ per month
Not considered
Depreciation fitted kitchen
depreciation parking space/TG
Real estate transfer tax/notary fees
KFW loan + repayment subsidy
Basically - as soon as the monument certificate is available from the authorities, the tax refund can be claimed either via the annual tax return or via a monthly allowance.
In addition, listed properties often hold their value particularly well because they are usually very beautiful/special objects. However, I do not want to include this in the calculation, as this is not the main goal of an investment in a listed property.
So that was a lot of numbers - but I think it is quite clear how well something like this can pay off, especially if you have a high tax rate. At 42%, you end up with about +-0 after tax expense.
In addition, this is all calculated without equity (outside the regular purchase costs (notary, land transfer tax), etc.).
Accordingly, I think it makes sense, especially as a high earner, to permanently buy at least one listed property, hold it for 12 years and then sell it tax-free. Then you buy a new one and the game starts all over again.
I hope you enjoyed this article and I could possibly inspire you a bit for the topic. I personally find it super useful to make use of real estate in addition to shares and crypto.
If you can then also include taxes in the asset accumulation, I find that top.
Questions gladly in the comments. Even if something was written unclear or too complex.
I wish you a great start to the week 😊
Your melon. I wish you good luck with your trading/investing.
#immobilie#ddenkmalimmobilie
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